Unpacking Crypto’s Biggest Legal Hurdles: An Interview with Maltese Advocate Luke Mizzi

In 2025, despite legal progress, many jurisdictions still lack clear crypto regulations. The topic featured prominently at the Digital Assets Innovation Summit, held on July 2, the final day of the City & Financial Global 2025 conference in London.

To understand where things stand today, The Coinomist spoke with lawyer Luke Mizzi about the current regulatory landscape, international trends, and the evolving treatment of crypto assets across Europe.

Luke is a Lead Associate at Camilleri Preziosi Advocates and forms part of the firm’s financial services team. His main areas of practice are financial regulation and compliance, advising payment institutions, e-money institutions, insurance undertakings, insurance managers, investment advisors, crypto service providers, and token issuers. 

Luke has recently advised clients on the implications of the Markets in Crypto-Assets Regulation (MiCAR). His work includes guiding firms through MiCAR licensing, compliance strategies, and regulatory structuring for crypto-asset offerings across the EU. 

The Two Biggest Barriers to Bitcoin Treasury Adoption

The number of companies investing in Bitcoin continues to rise, with Strategy (formerly MicroStrategy) remaining the largest corporate Bitcoin holder. Despite this growth, companies that build their treasury strategies around Bitcoin, rather than simply holding it as a secondary asset, still represent a small minority. As a result, Bitcoin treasury companies remain outliers rather than the norm.

When asked about the biggest hurdles preventing Bitcoin treasuries from becoming standard practice, lawyer Luke Mizzi pointed to two key factors: regulatory uncertainty and financial reporting challenges.

The institutional adoption of Bitcoin as a treasury asset remains constrained by two critical and interrelated challenges: regulatory uncertainty and the unsettled nature of its financial reporting treatment,- says Luke. – Both factors introduce material risk and complexity for corporates, particularly those subject to stringent governance, disclosure, and compliance obligations.

Top Concern: Regulatory Uncertainty

According to the lawyer, regulatory uncertainty remains the foremost concern. “Notwithstanding the great strides taken in the European Union and other jurisdictions to regulate crypto-assets, there remains no globally harmonised framework governing the legal status of Bitcoin,” he said. Luke added that the lack of clarity creates interpretive risks in areas such as anti-money laundering compliance, prudential treatment, licensing requirements, and custody arrangements. 

“For public companies and regulated institutions, the absence of consistent legal standards undermines the ability to confidently hold and manage Bitcoin within an established risk and compliance framework,” he concluded. 

Accounting Rules Make Bitcoin a Tough Fit 

Besides regulatory concerns, there’s also uncertainty surrounding the accounting treatment of Bitcoin, Luke pointed out, explaining:

“Under prevailing financial reporting practices, Bitcoin is generally not classified as cash or a financial asset. Instead, most companies account for it as an intangible asset measured at cost, subject to impairment. While revaluation models may be available in some jurisdictions, they are rarely applied in practice. This asymmetrical treatment, where value decreases are recognised but unrealised gains are typically not, can distort a company’s financial position and make Bitcoin a less attractive reserve asset from a reporting standpoint.” 

Regulatory Developments to Keep an Eye on 

Until the shift in U.S. administration after the 2024 presidential election, the crypto industry was marked by high-profile enforcement actions from the Securities and Exchange Commission (SEC), including lawsuits against Ripple, Coinbase, and Binance. Most of these cases have now been dropped, but they shaped much of the global conversation around how crypto should be regulated.

Meanwhile, important but less-publicized regulatory developments are emerging abroad. We asked Luke about one in Europe that could quietly reshape the future of digital assets:

The Coinomist: Outside the high-profile SEC cases in the U.S., what is one lesser-known legal case or regulatory development in Europe or Asia that you believe could set a major global precedent for the crypto industry?

Luke Mizzi: A significant but underappreciated development is the emerging dispute between the European Commission and the European Central Bank regarding the treatment of stablecoins under the Markets in Crypto-Assets Regulation (“MiCAR”) specifically, whether identical tokens issued by different entities within the same corporate group, one EU-licensed and one not, should be considered interchangeable.

The European Commission appears inclined to permit such fungibility, on the condition that a reserve rebalancing mechanism ensures EU-based reserves correspond with the holdings of EU tokenholders. This approach favours a pragmatic, market-led interpretation of MiCAR, prioritising operational efficiency and cross-border usability. 

In contrast, the ECB has expressed serious reservations, warning that this structure could pose a risk to financial stability. In particular, the concern is that, during periods of redemption stress, EU reserves might be used to satisfy claims from non-EU holders, thereby undermining the integrity of the eurozone’s financial safeguards and eroding its monetary autonomy.

If the EU Commission’s position is ultimately adopted, it could set a precedent for the global interoperability of regulated stablecoins, resulting in an outcome with far-reaching implications for international digital money flows. It would effectively challenge jurisdictional ring-fencing and support the emergence of stablecoins as borderless instruments within a regulated framework. Beyond the European Union, this decision may shape how other jurisdictions approach the structuring of stablecoin regimes, particularly those with exposure to the EU financial system. For issuers operating across multiple regulatory environments, it raises complex questions around group structuring, reserve governance, and cross-jurisdictional operational risk that will require careful legal and strategic planning.

How Malta Competes with Other Crypto Hubs

Camilleri Preziosi Advocates, the law firm where Luke serves as Lead Associate, is based in Valletta, Malta, a jurisdiction that was among the first in Europe to implement a legal framework for the crypto industry. We wondered whether Malta remains competitive in 2025, and how it differentiates itself from other countries.

The Coinomist: Malta was a first-mover in crypto regulation, but now faces intense competition from jurisdictions like Dubai, Hong Kong, and Switzerland. What is Malta's unique “value proposition” today to attract top-tier projects, beyond just being “blockchain-friendly”?

Luke Mizzi: Malta’s value proposition today lies in its positioning as a fully EU-integrated jurisdiction that combines regulatory credibility, commercial pragmatism, and strategic access to the European single market under MiCAR. 

Unlike non-EU jurisdictions such as Dubai, Hong Kong or Switzerland which offer domestic clarity but no cross-border passporting, Malta enables crypto-asset service providers to operate across all EU and EEA markets under a single authorisation.

This scalability, grounded in legal certainty, is a significant advantage for firms seeking growth within a harmonised and increasingly institutionalised regulatory landscape.

Beyond market access, Malta offers regulatory experience and institutional depth that few competitors can match. As the first EU Member State to enact dedicated crypto legislation in 2018, Malta has developed a mature legal framework and a regulator, the Malta Financial Services Authority (“MFSA”), with a practical understanding of the sector. The MFSA’s early engagement with crypto firms has allowed it to build industry knowledge that is now being applied to the MiCAR regime with credibility and context. This translates into a licensing process that is not only robust, but also efficient, enabling faster time to market without compromising on regulatory standards. 

Malta also offers an operationally flexible and commercially supportive environment. Local substance requirements are proportionate, outsourcing is permitted within clear regulatory parameters, and English is an official language, facilitating ease of access for international firms. Notably, Malta’s ecosystem includes a well-established network of professional service providers such as law firms, auditors, technology service providers and risk and compliance specialists with deep experience in crypto and digital finance. This allows firms to outsource core functions with confidence, knowing that local providers are not only technically skilled but also familiar with the unique regulatory and operational nuances of the sector. 

The legal system is rooted in EU law and influenced by UK common law traditions, offering predictability and enforceability for complex cross-border operations. Importantly, this ecosystem has already attracted significant international players. Firms such as Crypto.com, Gemini, and Bitpanda have recently established operations in Malta, reflecting the jurisdiction’s credibility and competitiveness at the institutional level.

In short, Malta’s appeal is not based on promotional rhetoric but is grounded in regulatory credibility, institutional experience, flexible operational arrangements and strategic market access. 

About the Missing Legal Link in Tokenisation 

From real estate to art, everything is being tokenised, but that doesn’t mean it’s legally protected. We asked Luke Mizzi about the challenges the sector faces. 

The Coinomist: The tokenisation of Real-World Assets (RWAs) is a major trend, but it brings immense legal complexity, especially regarding property rights and cross-border enforcement. What do you see as the single greatest legal challenge to making tokenized RWAs a mainstream, liquid asset class? 

Luke Mizzi: The central legal challenge lies in ensuring that tokens confer enforceable rights to the underlying asset, particularly in a cross-border context. Tokenisation may digitise economic entitlements, but without a clear and binding legal link to the off-chain asset, the token itself often amounts to little more than a digital representation. Most legal systems remain territorial in how they treat property, equity, and creditor rights. Unless tokens are explicitly recognised under the law as representing title or enforceable claims, holders may find themselves with no legal recourse in a dispute, insolvency, or enforcement scenario.

This enforceability gap is at the heart of why tokenised RWAs remain largely illiquid. Courts and regulators increasingly recognise that unless the legal system says, in effect, “this token gives you a legally protected right,” the token carries no real weight beyond a private contract. Efforts to resolve this include the use of structured legal wrappers such as special-purpose vehicles, trusts, or custodial arrangements that map the token to enforceable rights in law. The challenge is compounded by fragmented regulation. 

Tokens often straddle multiple regimes, such as securities legislation, AML/KYC, and data protection, each with differing compliance obligations. A misstep in classification or operational design can trigger enforcement risk or regulatory arbitrage. Technological vulnerabilities in smart contracts and a lack of interoperability standards further complicate enforceability, particularly when legal liability for breaches or losses is unclear.

In short, tokenisation alone does not solve for legal certainty. Real-world enforceability depends on robust legal structures, jurisdictional recognition, and harmonised regulatory treatment. Until global legal systems evolve to support direct legal recognition of tokenised rights and coordinate cross-border enforceability, RWAs will remain operationally promising but legally constrained. Therefore, jurisdictions that align token form with legal substance will lead the development of truly liquid, institutional-grade token markets.

A Lawyer’s View: Luke Mizzi on DAOs and DeFi

In our final question, we asked Luke Mizzi for his opinion on decentralized finance and decentralized autonomous organizations, and how he sees regulatory implementation evolving in these areas.

The Coinomist: DAOs and other DeFi protocols often operate without a clear legal personality or jurisdiction. From a lawyer's perspective, how can traditional legal systems handle disputes or enforce rulings against these “ghosts in the machine”? Is a completely new legal framework required, or can existing laws be adapted?

Luke Mizzi: The absence of legal personality in decentralised autonomous organisations (“DAOs”) and many decentralised finance (“DeFi”) protocols poses serious challenges for enforcement, liability, and regulatory supervision. However, traditional legal systems are beginning to adapt by applying existing structures, such as general partnerships or unincorporated associations, to hold identifiable actors accountable. 

Courts have also recently shown increasing willingness to attribute legal responsibility to those involved in governance, token issuance, or operational control, particularly where decentralisation is more rhetorical than real. Regulators, in parallel, are applying securities, commodities, and AML frameworks to DeFi protocols where functional control can be established, regardless of whether the protocol is formally incorporated.

Jurisdictions that have developed bespoke legal frameworks offer a more direct solution. Malta stands out in this respect, having enacted the Innovative Technology Arrangements and Services Act (way back in 2018) which enables DAOs – and by extension, qualifying DeFi structures – to obtain legal recognition. These arrangements must meet criteria relating to governance, auditability, and accountability. Once certified, they gain standing in law: they can own assets, enter into contracts, and be subject to regulatory oversight and judicial enforcement.

DeFi-specific challenges often centre on protocols that are fully deployed on-chain and lack any off-chain management. In such cases, enforcement typically focuses on human actors such as developers, node operators, or liquidity providers where jurisdiction and control can be established.

Increasingly, however, DeFi projects are also experimenting with hybrid models that combine on-chain logic with off-chain legal structures, including legal wrappers, foundation models, and arbitration clauses. Dispute resolution platforms like Aragon Court and Kleros also demonstrate how internal governance systems can be used to manage protocol-level disagreements, though their enforceability outside the protocol remains limited unless tied to recognised legal processes.

Ultimately, I am of the view a wholly new legal framework is not essential but targeted adaptation is. Existing legal systems already possess the tools to address many aspects of decentralised governance and finance, particularly when supported by smart legislative design. 

Wrapping Up: Key Takeaways from Luke Mizzi 

Luke’s take on the state of crypto is that while regulatory challenges remain, there are also tools to address them. From Bitcoin’s unclear role in corporate treasuries to the legal gaps around tokenized assets and DeFi protocols, the industry is complex – but not stuck.

Regulatory uncertainty and outdated accounting standards still slow institutional adoption, yet some jurisdictions are quietly moving ahead.

Luke points to a pragmatic path: adapt existing laws. With careful legislative updates and targeted reforms, traditional legal systems can keep pace with technological progress.